John Garnaut

Five years ago a small-time hero from the People's Liberation Army called Zhao Faqi confirmed he had discovered one of China's largest reserves of accessible, high-quality coal, in the central province of Shaanxi. His drilling team found the coal seam was seven to eight metres thick, less than 100 metres underground, and stretched for 280 square kilometres.

Today, instead of driving Bentley cars and playing golf with China's political elite and nouveau riche, Zhao is scampering around the shadows of Beijing and constantly changing his phone SIM card so the police and hired vigilantes from Yulin City can't track him down. ''I am a wanted person so I have to keep moving,'' he says, in a private room at a far corner of Beijing, after checking the window and drawing the blinds.

Zhao's offence was that he refused to agree to plans by senior government officials to appropriate his entire coal resource in the name of ''stability'', while compensating him only for his costs.

Only a few years ago the consensus among many veteran China watchers, Chinese and expatriate, was that the country was gradually but inexorably evolving into a more democratic society and marketised economy, despite many obstacles and frustrations. Now many of these same people are sweating on the world-challenging possibility that China is lurching in the opposite direction.

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''Today's middle classes are the nouveau riche - like Mr Zhao - until they are targeted by bigger nouveau riche and left with nothing,'' says Zhao's Beijing lawyer, Pu Zhiqiang.

Pu is a leading and fearless civil rights lawyer who projects a presidential charisma. He has a front-row seat to observe how power and money works in China.

''The powerful elites use ultra-leftist methods to appropriate assets, often under the name of the environment or justice and, once they've got them, they share among themselves in an ultra-rightist way,'' he says.

In November 2006 the Shaanxi Supreme Court accepted Zhao's case that his contract with the local government exploration bureau was valid and he was therefore entitled to develop the mine in a joint venture as had been agreed. The Shaanxi government immediately appealed to the national Supreme People's Court, which sat on its judgment for nearly three years before recently referring it back down to the provincial court.

A secret letter obtained by Zhao's team suggests why. This letter, dated May 4, 2008, and signed by then governor of Shaanxi Yuan Chunqing, was not submitted via any formal legal process and it barely attempts to dress up its political request in legal reasoning.

Instead, it describes a series of ''serious'' consequences that would result if the earlier Shaanxi court decision was upheld in Zhao's favour: ''First, it would be copied by many and cause chaos in coalmine development. Second, it would cause a serious loss of state assets. Third, it would . . . have a negative impact on Shaanxi's stability and development.''

The letter requests that the Supreme People's Court of China refer the case back down to the province for retrial. The key word here is ''stability'', a term that is becoming an overarching justification for officials to do just about anything.

''The judicial system serves for maintaining stability, which I believe has become the ultimate state policy now, even over family planning,'' says Pu, the lawyer. ''Everything is for stability.''

After Zhao confirmed the extent of his coal deposit in 2005, the Shaanxi government purported to appropriate Zhao's interest and give it to a Hong Kong company controlled by Liu Juan, a former dancer and secretary whose father was a local county chief. The justification was that the coal bed would be developed into a hugely expensive coal gasification projection in partnership with a subsidiary of Sinochem.

The gasification project was widely seen as an uneconomic ruse to justify appropriating the asset from Zhao to Liu and her acquaintances. Indeed, there is nothing now to show for it except a caretaker's shed.

At the June 2006 project opening, Liu was accompanied by her close companion, a former Shaanxi official called Zheng Silin, who was then China's minister for labour. Others in the background include the former Shaanxi governor, Yuan Chunqing, the current acting governor, Zhao Zhengyong, and also Wang Dengji, the provincial head of the Land and Resources Bureau who previously made a name for himself appropriating hundreds of private oilwells in the area in 2003.

Zhao's lawyer, Pu, says all these officials became interested in Zhao's coalfields when it was proven to be of great value. And now, he says, they are in the final stages of securing it for themselves by getting the local Shaanxi court to overturn its earlier decision while also looking for some evidence that can be used to send Zhao to jail.

John Garnaut is Fairfax China correspondent.

1 comment

One despairs. How is it possible to effect any measure of justice into such a country and system?